EcoSpare: Reuse of industrial spare parts

Recycling is an issue we are familiar with as individuals. But what about the reuse and circular economy of industrial spare parts?

We interviewed Adil Mokhles, founder of the startup EcoSpare, to talk us about his approach and how his solution can help manufacturers manage the obsolescence of their machine park.

Can you tell us who you are and what is your industrial background?

I am a former Schneider-Electric, where I worked for 14 years. I trained as a mechanical engineer, then I took a master’s degree in marketing. Finally, more recently I completed an MBA in management from IAE Lyon.

In contact with the field, I realized how difficult it was for manufacturers to manage issues related to the obsolescence of electrical and electronic equipment.

A race for innovation?

The current problem is that manufacturers are evolving their lines so that some products are discontinued. Competition is driving an innovation race with the development of smarter, faster and smaller products. Industrial users of the equipment then find themselves in two situations:

• Large companies and large ETI companies, which have no financial problem to modify their machine, no structural problem to have internet skills (automation engineers, maintenance, technicians). They are also sometimes happy to equip their machines with the new generation of components. Either for image reasons, or to increase speeds, productivity, etc.
• Other companies, especially SMIs and small ETI companies, which do not necessarily have the means to renovate their production tools which are still in working condition. And therefore often not the possibility of replacing a complete system.

These situations motivated me to create EcoSpare, a company around the issue of the reuse of spare parts. In December 2019, I started the Startup Camp program of the EM-Lyon incubator followed by a mentorship to benefit from feedback and advice.Today we are 4 people including a developer, a content manager and an intern for the Marketing and digital part.

The refurbished spare parts market in France represents 25 M € in turnover and 100 M € in Europe. Our goal is to achieve 10% market share in three years. With a European development planned in the medium term too. We will fundraise to finance the conquest of Europe with the translation of the platform, and the recruitment of foreign resellers in Germany, England, Italy, Spain, and other European countries.

Where did you get the idea to launch EcoSpare, was there an event that was significant?

The idea came to me through discussions with manufacturers. In particular, they express their dissatisfaction with the announcement by the manufacturers of stopping the marketing of electrical equipment. The need was therefore obvious to me. But in the entrepreneurial world, I have learned not to just rely on my intuition.

This is why we conducted a market study with 41 maintenance managers. 1 in 2 prefers to replace only the obsolete product with another. Which represents 130,000 companies in France!

EcoSpare’s objective is therefore to structure the ecosystem of the industrial spare part market. Manufacturers spend a considerable amount of money upgrading machines that are still working just to make sure they have spare parts in the case of a breakdown. The idea is to put in contact manufacturers who have stocks of parts that they want to get rid of, with manufacturers who are looking for these same spare parts. There is therefore a double gain. On the one hand, companies value a stock of parts. And on the other hand, users benefit from parts that are no longer produced by the manufacturer.

Do you also propose to offer service to manufacturers? For example, to identify risky spare parts on their machines, and thus anticipate the supply of replacement parts

Yes, of course we have a role to play when it comes to auditing a company’s machinery. We also play our role as a trusted intermediary to connect buyers and sellers. Our network of 120 integrators is capable of doing this type of analysis throughout France.

We observe that equipment manufacturers do audits, but only on their equipment, and manufacturers are multibrand, they need someone who will audit all the equipment in their machine park.

The first service that we are going to launch is an audit of the installed base. A first level will be offered to identify the obsolescence of the material that will be entered on the platform. To go further in the analysis and propose solutions, we will rely on a network of 120 systems integrators. Indeed, this requires a trip to the client to cross the site to analyze the data and make a restitution. These two services will not be launched before 2 or 3 years after the launch of the marketplace www.spare-place.com.

https://www.youtube.com/watch?v=FG-huG9wln0

Concerning the savings linked to recycling, do you have any figures?

Yes, under the 3EW (Electrical and Electronic Equipment Waste) we know that there are 17,000 tones of products that are professionally wasted. About 80% of them are valued. For household appliances there is a sector that allows recycling. But for drives, control systems and PLCs, that requires skills. The necessary test benches are a little more extensive. 2,500 tones of material could be returned for reuse. This is how we fit into the circular economy.

How do you manage the warranty?

The minimum warranty is 3 months. These are the professional sellers, who will indicate the warranty associated with each component, when they put their catalog online at spare-place.com. The guarantees can therefore range from 3 to 24 months. Professionals will also have the possibility of offering paid guarantees with a change in prices according to the duration of the guarantee. The seller then provides the guarantee. The client rates the seller according to the service rendered. The client can open a dispute during the warranty period in order to find a solution to any misunderstandings encountered. The objective is to also provide internet messaging allowing a fluid exchange between manufacturers to quickly find a solution to a lack of parts.

Have you established partnerships with material manufacturers? To imagine being able to also offer catalogs of obsolete products or serve as a relay for industrial spare parts at the end of their life?

Indeed, we are in the process of approaching certain manufacturers such as Siemens and Schneider-Electric, in order to be able to communicate on the obsolescence of their equipment. The goal is for them to open their database to us so that we can be informed as soon as possible and relay this information to our network. We also offer the possibility to manufacturers registered in the framework of the circular economy, to submit their product offers repackaged by them. With this, they can open other distribution networks different from the historical network. The objective is to offer alternative solutions to renovation while waiting for manufacturers to prepare their budgets, which can be substantial.

How do you deal with the storage costs that this entails?

The sellers provide storage. Our goal is to provide a marketplace with spare-place.com. We do not manage transport or storage. Parts do not travel for miles unnecessarily. This limits the carbon imprint. Delivery is made directly by the professional seller.

What is the profile of the sellers that we can find on spare-place.com?

We have identified two types of sellers: first, professional sellers, their job is to sell refurbished products in France, but the industry is not well organized today. We have efficient but local actors. Our ambition is to give them visibility through the federation. Next, we are also targeting professionals, manufacturers, who have a dead stock of products (maintenance stocks linked to machines that are no longer in use, for example). Equipment has market value; it may even be new, even if it is old. But they don’t know what to do with it, and the machine that these parts were intended for is sometimes not even in the factory anymore, so there is no use in keeping that stock. They will therefore be able to register to resell the equipment.

In reality, these second industrial profiles have the choice between managing the sale on spare-place.com by themselves. Or they forward the list of their stock to professional resellers who can buy back the products. Usually, they will choose this second option. The objective is to find solutions so as not to throw the products away.

How will the marketplace work? So that clients find themselves there?

The fundamental idea is the principle of a unified product sheet. We will be working with 200,000 references from different suppliers, so it is essential to be able to navigate. For example, we keep a history of pdf product datasheets; we have 6000 at the moment. But the goal is to quickly pass the bar of one million referrals that can be managed on spare-place.com. One of our challenges is for products to be found automatically when the seller adds a new product. Such a feature is of great complexity and it takes time and it is for this reason that the launch of spare-place.com is scheduled before the end of 2020.

Do you already have lead clients, involved in the recycling of industrial spare parts, to test the tool?

Today we already have consultations both in France and internationally, which allows us to confront the field and the expectations of our clients. This is about testing the market to verify our hypotheses about the marketplace, and during the testing phase we will need beta testers.

We already have 10 professional sellers who trust us today. But indeed we are looking for clients to test the system.

THE MARKET FOR REFURBISHED SPARE PARTS IN FRANCE REPRESENTS € 25 MILLION IN TURNOVER AND € 100 MILLION IN EUROPE.

How is EcoSpare paid?

As a linkage intermediary, we offer our services. For this reason, we are paid by receiving a commission on transactions. The advantage for the seller is that there are no registration fees or costs to put the products on sale. Which differs from our competitors. We want pricing to be as transparent as possible. Sellers will therefore be able to project themselves with confidence on our platform.

In terms of price for the buyer of the products, do you have an idea of the market position?

Yes of course we have conducted a study on this subject. We estimate that the price of a used component needs to be about half of the new market price for the buyer to find an interest in purchasing a used product that is still marketed as new by the manufacturer. The warranty also plays a role and there must be a further 12 months warranty on the product.

On the obsolete product, there is no comparison. If we want to compare ourselves to the price of new before the end of marketing. In this case, the product can be sold at a higher price. Because the client compares with the price of modification of their whole system. In any case, our clients conduct a profitability study before making this kind of decision. Scarcity can increase the price of the product because it serves the user. But the budget should not, of course, be comparable to the complete renovation of the equipment.

How do you see the next steps for EcoSpare?

The next important milestone for us is the release of the spare-place.com marketplace. Then the time will come to strengthen partnerships. The journey of a startup is full of challenges, which is why we must not be dispersed, and we must stay focused on the main activity before moving on to the following ones.